By James Langton

(January 5 – 12:40 ET) – Ontario’s Minister of Finance has approved a rule providing reciprocal relief for U.S. brokers serving clients in Canada. The move follows from a similar SEC rule made in the U.S. last summer.

The new rule took effect January 1, providing conditional registration exemptions to U.S. broker-dealers that have no offices or other physical presence in any jurisdiction in Canada. It applies to trades in foreign securities on behalf of U.S. residents’ tax-advantaged accounts, or for Americans that are temporarily living in Canada.

The broker-dealers may not advertise for, or solicit, new clients in Canada. They must be a member of the NASD. And they must inform regulators of their intention to rely on the exemption.

The OSC says, “In order to facilitate certain cross-border trading activities that may arise between United States broker-dealers and their existing clients who are now located in Canada, the [regulators have adopted this rule].

“This approach is consistent with the underlying policy that investors will be relying primarily upon the regulation by securities regulators and statutory liability imposed by legislation in the broker-dealer’s or agent’s home jurisdiction for protection.”